Audit report, for the year ended June 30, 1995, Chatsworth Health Care Center, Inc., Medicaid provider no. 00209778A, Nursing Facilities Services Program

GA

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llfi'ii.f-95 -DEPARTMENT OFAUDlTS- -

Medicaid and Local GovernmentAudits'.

- .-_- _-- - ---.... < AUDIT-REPORT --
. _ _. FOR THE YEAR ENDE-D JUNE30, 1995' .
.- CltATSWORTII HEALTH CARE CENTER, INC. -
. . . . .- MEDICAID ,PROVIDERNUMBER 00.2O9778A
NURSING_FACILITIESSERVICES PROGRAM. _

TABLE OF CONTENTS
LETTER OF TRANSMITTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FINDINGS AND RECOMMENDATIONS ................... 3
Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 9 Schedule of Allowable Costs and Patient Day Statistics 11

Report Prepared By:
State ofGeorgia Department ofAudits and Accounts Medicaid and Local Government Audits Division 254 Washington Street, S. W., Suite 322
Atlanta, Georgia 30334-8400 (404) 656-2006
Michael A. Plant, Director

CLAUDE L VICKERS
STATE AUDrTOR

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535
May 7, 1996

Members of the Board of Medical Assistance, and The Honorable Marge Smith, Commissioner Department ofMedical Assistance 2 Peachtree Street, N.W., Suite 27-100 Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit of Chatsworth Health Care Center, Inc., provider number 00209778A, a participant in the Nursing Facilities Services Program for the year ended June 30, 1995. This report is intended to be used solely in connection with the administration of the Georgia Department ofMedical Assistance Nursing Facilities Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,
~~
Claude L. Vickers State Auditor
CLV/mj/by

1995 Audit Report: Chatsworth Health Care Center, Inc.

1

INTRODUCTION

Provider Information

Chatsworth Health Care Center, Inc., is a 120-bed long-term health care facility located in Chatsworth, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility was operated as a component of Blue Ridge Nursing Homes, Inc., a chain organization which filed a Home Office Cost Report with OMA for the year ended June 30, 1995.

Audit Objectives

The purpose of this audit was to determine whether Chatsworth Health Care Center, Inc., a provider enrolled in the Georgia Medicaid Nursing Facilities Services (NFS) Program, maintained adequate documentation to support the allowable costs and.patient day statistics reported in its Nursing Home Cost Report for the year ended June 30, 1995; and to determine whether Chatsworth Health Care Center, Inc., complied with the federal and state laws, regulations, policies and procedures for the NFS Program in effect for that period. The specific objectives of this audit were to:



determine if allowable costs reported in the Nursing

Home Cost Report are reasonable and allowable, in all

material respects, in accordance with federal and state

laws, regulations, policies and procedures governing

the Georgia Nursing Facilities Services Program;

2
Scope and Methodology

Nursing Facilities Services Program



determine if patient day statistics included in the cost

report are accurately reported; and



recommend appropriate action based on the results of

our audit.

To accomplish these objectives, we interviewed provider personnel and examined records and documentation to determine the adequacy of amounts and disclosures included in the Nursing Home Cost Report. We performed a limited review of the provider's internal control structure to the extent necessary to plan our audit. We also reviewed, on a test basis, evidence supporting these amounts and disclosures and assessed the accounting principles used and significant estimates made by management. We evaluated the tested transactions and accounts for compliance with cost reporting principles included in the Health Care Financing Administration Provider Reimbursement Manual (HCFA Pub. 15-1) and OMA Policies and Proceduresfor Nursing Facility Sen,ices.

1995 Audit Report: Chatsworth Health Care Center, Inc.

3

FINDINGS AND RECOMMENDATIONS

Finding No.1

Incorrect Expense Classifications

Documentation examined during the audit showed that some ofthe expenses were not classified in accordance with the Uniform Chart of Accounts prescribed by the Department ofMedical Assistance for providers participating in the Medicaid Nursing Facilities Services Program. We recommend that the provider implement policies and procedures to ensure that all of its expenses are classified in the appropriate cost centers. We recommend that the -Department of Medical Assistance make the following adjustment to reclassify costs to the appropriate cost centers.
(DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Administrative Supplies Special Services Cable Television Oxygen Dietary Lease Laundry and Housekeeping Waste Cans Operation and Maintenance of Plant Cable Television Administrative and General Administrative Supplies Liability Insurance Expense Property Taxes Waste Cans Property and Related Expenses Lease Liability Insurance Expense Oxygen Property Taxes

$

$

257

8 819

$

1,910

1,123

(87)

(397)

$

1,148

(1,123)

(8,819)

87

(1,910) 9,076 (1,148)
397 (257)
2,549

Net Adjustment to Allowable Costs

$=======!!=

4

Nursing Facilities Services Program

Finding No.2

Nurse Aide Testing and Training Costs

Documentation examined during the audit showed that the provider did not remove nurse aide testing and training costs from allowable costs claimed as required by the Department of Medical Assistance in General Instructions to Cost Report. We recommend that the provider implement policies and procedures to ensure that nurse aide testing and training costs are not included in allowable costs. We recommend that the Department ofMedical Assistance make the following adjustment to decrease allowable costs by the amount of nurse aide testing and training costs.
(DMA General Instructions to Cost Report)

COST CENTER Routine Services

$=====C~St::!:!6=1~2}=

Finding No. 3

Costs Not Related to Patient Care
Allowable costs claimed included payments which were not considered to be for patient care operations. Federal regulations provide that costs which are not appropriate or necessary and proper in developing and maintaining the operation of patient care facilities and activities are not allowable in computing allowable costs. We recommend that the provider implement policies and procedures to ensure that expenses claimed in the cost report do not include items not related to patient care. We recommend that the Department of Medical Assistance make the following adjustment to remove the non-patient care expenses from allowable costs.
(HCFA Pub.15-1 Sections 2102.3, 2102.1, 2139; DMA Policies and Procedures Section I002.1 (k))

1995 Audit Report: Chatsworth Health Care Center, Inc.

5

ITEMS Association Dues (50%) Donations Flowers for Doctors Late Fees Political Contributions Property Taxes on Rental Building V.A. Patient Visits Vehicle Expense - Personal Usage
COST CENTER Special Services Operation and Maintenance of Plant Administrative and General Property and Related Expenses
Total Adjustment to Allowable Costs

$

(43)

(50)

(108)

(465)

(180)

(1,185)

(1,954)

(90)

$

(4 075)

$

(1,954)

(108)

(621)

(1,392)

$

(4 075)

Finding No. 4

Recalculation ofAncillary Services Cost Adjustment
The provider received revenues from the sale of ancillary services to patients; therefore, allowable costs for special services are limited to the maximum allowable cost calculated on Schedule B-IA of the cost report. Documentation examined during the audit showed that certain corrections were necessary to amounts reported on Schedule B-IA as total cost per books, total charges, Medicaid charges, total patient days, and Medicaid patient days. These findings required the recalculation of Schedule B-IA. A copy of this recalculation has been furnished to the provider. We recommend that the provider implement policies and procedures to ensure that all information used to calculate the ancillary services cost adjustment is correct. We recommend that the Department ofMedical Assistance make the following adjustment to decrease allowable costs for the net effect of the recalculation.
(General Instrnctions to the Cost Rep01t)

6

Nursing Facilities Services Program

Ancillary Services Oxygen
COST CENTER Special Services

Adjustment Per Cost Report

Recalculated Adjustment Audit Finding

$

(22:1) $ (2 Q:13) $

(8 812)

$.====='8:!::8!:!::::]!::::!2=::)

Finding No. 5

Allocationsfrom Home Office

The provider was a component of a chain organization for the year ended June 30, 1995. As a result of our audit of the home office cost report filed in connection with the Medicaid Nursing Facilities Services Program, we recommended that the Department of Medical Assistance make adjustments to the allowable costs claimed by the home office. We recommend that the provider and its home office implement policies and procedures to ensure that only allowable costs are allocated from the home office to the provider. We recommend that the Department of Medical Assistance make the following adjustment to correct allowable costs to reflect the allocation of the adjustments made to the home office cost report.
(HCFA Pub. 15-1 Section 2150)

COST CENTER Operation and Maintenance of Plant Directly Allocated Costs Administrative and General Pooled Costs Administrative Expenses Property and Related Expenses Pooled Capital Related Interest Expense

$

(3,711)

(6,972) (1,496)

Total Adjustment to Allowable Costs

$====='c::!::1:!=!:12:::!:::]7==2=)

1995 Audit Report: Chatsworth Health Care Center, Inc.

7

Finding No. 6

Lack ofSufficient Documentation

Some of the expenses included in allowable costs were not supported by adequate documentary evidence. Federal regulations provide that cost information as developed by the provider must be current, accurate, and in sufficient detail to support paymef!ts made for services rendered to beneficiaries. We recommend that the provider implement policies and procedures to ensure that all expenses shown on the cost report are supported by sufficient documentation. We recommend that the Department of Medical Assistance make the following adjustment to remove the undocumented expenses from allowable costs.
(HCFA Pub. 15-1 Section 2304)

COST CENTER Administrative and General Property and Related Expenses

$

(518)

(3,732)

Total Adjustment to Allowable Costs

$.======'4:::!:::=2!::!:5:!:!:0=)

Finding No. 7

Accrual Basis ofAccounting
Documentation examined during the audit showed that amounts recorded for certain expenses did not reflect actual amounts incurred for the period under review. Federal regulations provide that expenditures ... are recorded in the period in which they are incurred, regardless of when they are paid. We recommend that the provider implement policies and procedures to ensure that costs are recorded in the period in which they are incurred. We recommend that the Department of Medical Assistance make the following adjustment to decrease allowable costs claimed for expenses not applicable to the year under review.
(HCFA Pub. 15-1 Section 2302.1)

8

Nursing Facilities Services Program

Adjustments to Balance Sheet Accounts:
June 30, 1995 Balance Accounts Payable
COST CENTER Administrative and General Property and Related Expenses
Total Adjustment to Allowable_ Costs

Allowable Costs

$

(J 256)

$

(450)

(806)

$

(] 256)

Finding No. 8

Expense Applicable to Anotlter Cltain Component

Allowable costs claimed included amortization and interest expense applicable to another chain component. Federal regulations provide that cost information as developed by the provider must be current, accurate, and in sufficient detail to support payments made for services rendered to beneficiaries. We recommend that the provider, its home office, and all other components of the chain implement policies and procedures to ensure that all costs are included in allowable costs of the chain component to which they apply. We recommend that the Department of Medical Assistance make the following adjustment to remove from allowable costs the expenses applicable to another chain component.
(HCFA Pub. 15-1 Section 2304)

COST CENTER Administrative and General

$,====='~6t:!!!6::!=!8:::!::]""")

COMPONENT FACILITY Fairburn Health Care Center, Inc.

$==='!c!:6=:!6=:!:8:::!:]::i!:::)

1995 Audit Report: Chatsworth Health Care Center, Inc.

9

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

2

Nurse Aide Testing and Training Costs

$

(1,910)

(8,612) $

Special Services

I

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

4

Recalculation of Special Services Cost

Adjustment

$

9,076

(1,954)

(8,819)

Dietary

1

Incorrect Expense Classifications

Laundry and Housekeeping

1

Incorrect Expense Classifications

Operation and Maintenance o(Plant

1

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

5

Allocations from Home Office

$

(257)

(108)

(3,711)

(10,522)
(1,697) (1,148)
397 (4,076)

Nursing Facilities Services Program

FINDING NUMBER

ALLOWABLE COSTS

Administrative and General

1

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

5

Allocations from Home Office

6

Lack of Sufficient Documentation

7

Accrual Basis of Accounting

8

Expense Applicable to Another Chain

Component

$

2,549

(621)

(6,972)

(518)

(450)

{61681)

(12,693)

Property and Related Expenses

1

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

5

Allocations From Home Office

6

Lack of Sufficient Documentation

7

Accrual Basis of Accounting

$

(8,707)

(1,392)

(1,496)

(3,732)

{806)

061133)

Total Audit Findings Affecting Allowable Costs

$======{4=5=,8=72=)

1995 Audit Report: Chatsworth Health Care Center, Inc.

11

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

ALLOWABLE COSTS Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance of Plant Administrative and General Property and Related Expenses

COST REPORT TOTALS

AUDIT FINDINGS

AUDITED TOTALS

$ 1,366,474 $ 109,849 298,075 241,613 166,449 417,429 226,398

(10,522) $ (1,697) (1,148) 397 (4,076)
(12,693) (16,133)

1,355,952 108,152 296,927 242,010 162,373 404,736 210,265

Total Allowable Costs

$ 2,826,287 $ (45,872) $ 2,780,415

PATIENT DAY STATISTICS

43,286

43,286